Turnbull: "They don't like us being focused on ourselves"

UPDATE: Peter Dutton says he took Malcolm Turnbull on for the Liberal leadership because he thought it would give the government a better chance of beating Bill Shorten at the next election.

Mr Dutton, who resigned from cabinet to the backbench today after losing a challenge to the Prime Minister, did not rule out a future tilt at the Liberal leadership but maintained he would do all he could to help the government beat Labor at the next election.

"The problem is that Bill Shorten would be a disastrous Prime Minister of this country and I believe I had the best prospect of leading the Liberal Party to success at the next election," Mr Dutton said.

"That was not to be today and I understand and I respect the outcome and I fully support the Prime Minister and the cabinet. "My position from here will be to do what I can as a backbencher to make sure that I support the government, to make sure we are elected and can keep Bill Shorten from the Lodge."

Mr Dutton gave a list of policies the government needed to get right if it was to win the next election, including lowering electricity prices and immigration levels.

"I believe strongly that we can win the election if we get the policies and the message right about lowering electricity prices, about making sure that we can do more on infrastructure and in particular around the migration program, until the infrastructure can catch up in our capital cities," he said.

"We need to invest more in water to get farmers out of drought so they do not go through what they go through at the moment.

"We need to invest records amounts into health and education, aged care and other areas as well."

EARLIER: PETER Dutton has resigned as Home Affairs Minister after Malcolm Turnbull defeated him in a heated leadership challenge. But it's not over yet as the Prime Minister could face another spill from MPs.

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Turnbull won the leadership vote by 48 votes to 35 and will remain Prime Minister.

Chief government whip Nola Marino said Mr Turnbull called a ballot in the Liberal Party room after declaring his leadership vacant, and Mr Dutton put his hand up to challenge.

Sky News political editor David Speers said the situation was a "humiliation" for Mr Turnbull.

"In parliament, he's going to be standing there in front of a backbench, a third, nearly half of whom don't support him," he said.

"Incredibly difficult to see how Malcolm Turnbull can recover from this."

While the challenge over the prime ministership was ostensibly about energy policy, the true source of the leadership tensions goes much deeper.

Mr Dutton was seen as an alternative leader who could better represent the conservative wing of the party, which is not interested in locking Australia into ambitious carbon emissions cuts.

EARLIER: MALCOLM Turnbull's support in the Liberal party room has collapsed and he is facing the prospect of a leadership challenge as early as this morning.

Mr Turnbull has gutted two of his own signature policies in the last 24 hours in an effort to save himself, removing the carbon emissions target from the National Energy Guarantee (NEG) and depriving the big four banks of his company tax cuts.

A senior source has told The Daily Telegraph Mr Turnbull is "in panic mode" and "clearly rattled" amid reports Home Affairs Minister Peter Dutton is considering launching a leadership challenge at today's Liberal party room meeting, which starts at 9am.

48-35 is far too close for comfort, given how quickly this was brought on. Dutton to the backbench and then a fresh challenge by February, that I imagine he'll win. How desperately depressing. #auspol#libspill

Key Turnbull backer says the 48-35 victory would have been by 14 votes had Arthur Sinodinos been present. Says Dutton should accept the result, given Turnbull's victory over Dutton bigger than Turnbull's 54-44 victory over Abbott in 2015. #libspill

Am I the only person who thinks it’s weird that when there is #libspill speculation people say ‘Dutton’ not ‘Julie Bishop, obviously. I mean are you kidding? Julie Bishop 💯only sensible choice. Julie Bishop’. Wonder why.

The Australian says nine of Mr Turnbull's 18 Liberal cabinet colleagues have lost confidence in him, and the Prime Minister spent last night ringing MPs to shore up support.

The only question appears to be whether Mr Dutton will strike immediately or wait until parliament returns on September 10. That would potentially coincide with Mr Turnbull's 40th consecutive Newspoll loss.

As you may recall, Mr Turnbull cited Tony Abbott's 30 straight defeats in the poll as one of the main reasons for toppling the former prime minister.

DODGING THE QUESTION

Appearing on the ABC's 7.30 program last night, Treasurer Scott Morrison refused to concede Mr Turnbull's position was under threat.

Mr Morrison fronted up to be interviewed by Leigh Sales because Mr Turnbull himself declined the invitation. Ms Sales asked whether there was a "legitimate threat" to the Prime Minister.

"I don't believe so, and the reason for that is we're getting on with the job and just announced another big change in terms of going forward with the ACCC," Mr Morrison responded.

In his parliamentary register of interest, Mr Dutton lists himself as a beneficiary of RHT Family Trust - along with his wife and children.

According to ASIC documents, the business owns two child care centres in northern Brisbane.

Under a law change Mr Dutton voted for, those centres have been receiving direct subsidies from the government since July 2 this year.

But Ten notes that, under Section 44(v) of the Constitution, any person with "any direct or indirect pecuniary interest with the Public Service of the Commonwealth" is disqualified from Parliament.

In April last year, the High Court ruled that then Family First Senator Bob Day was not validly elected to parliament, due to his breaching Section 44.

The Commonwealth had leased the office space at a building he owned in order to house his electorate office, the ABC reported.

Mr Day transferred the property to a family friend, but documents revealed there was an agreement that proceeds from the rent would go to a company he owned.

A spokesman for Mr Dutton told Ten: "Mr Dutton's legal advice clearly states there is no breach of Section 44."

But, if the case is referred by parliament, it could become a matter for the High Court to decide.

Meanwhile Hugh Riminton, the journalist who broke the story, has dismissed suggestions it was leaked to him by a Liberal Party member.

"We've been watching pecuniary interest matters with federal parliamentarians for a long time," he told The Project, noting his coverage of a similar story about Turnbull backbencher Barry O'Sullivan last year.

"The timing of all this talk of leadership issues is coincidental," said Hugh. "Many people won't believe thatm but its true."